What next for property in 2018?

December 30, 2017Article by Charlotte Seller

What a year it’s been! Back in 2016 we had Brexit, a new prime minister, Donald Trump’s election, and so when it came to expecting the unexpected, 2017 had a lot to live up to. But then there was an unanticipated snap general election, the unexpected result, and consequently what we have now – a weakened government with a resilient Theresa May at the helm. Surely 2018 is going to be a lot less eventful!

Political and economic uncertainty has contributed to what has also been a rather difficult year for the housing market, underpinned by a lack of stock, leaving many agents struggling to find homes to sell, while property prices have stayed broadly static – although there has been a divergence between house prices in different parts of the UK.

Regional hotspots

While the market in London continues to slow, regional hotspots are likely to be the drivers of UK house price growth in 2018 and beyond.

Strutt & Parker forecasts that property price in the UK will rise by an average of 18% over the next five years to 2022, led unsurprisingly by areas that are seeing high demand and low supply.

Hometrack projects that the recovery in regional cities could offset low nominal growth in London, pointing to the fact that those cities that have seen the weakest recovery since the market crash in 2009 are now enjoying the highest rate of price inflation.

Those areas include Leicester, Birmingham, Manchester, Nottingham, Liverpool, Glasgow and Edinburgh, according to Hometrack.

But while Ray Withers, CEO of Property Frontiers, accepts that the residential market is due what he described as a “profound refresh”, he believes that many secondary cities are blindly “lurching into oversupply” with developers responding principally to demand from investor-buyers rather than the renters and end-users that actually drive the market.

He said:

“Something surely has to give: 6,963 units are currently underway in Manchester – more than double the previous record set before the crisis! At a time of downgraded growth forecasts and political uncertainty, that feels particularly precarious.”

The property expert estimates that less well-known but equally promising and enterprising regional towns, such as Halifax, Wakefield, Bradford, and Doncaster, will lead the way in 2018, not just in terms if house price growth but also rental price inflation, making them “next year’s buy-to-let hotspots”.

“Such places benefit from low entry points, an availability of strategically located development sites, weak competition from existing rented stock, and the promise of catch-up growth. Of course, they must always exhibit the classic market drivers as well: an uptick in jobs and population, new regeneration or infrastructure projects, among other factors.”